The volume of retail sales increased 3.6% in July when compared with June, according to the Office for National Statistics (ONS). This takes retail sales to 3% above the pre-pandemic levels in February 2020.

It said fuel sales continued to recover from their lows but were still down 11.7% compared to February. This ties in with Department for Transport data showing car road traffic was around 17 percentage points lower in the same period.

Clothing store sales were the worst hit during the pandemic with the sector experiencing a 25.7% decline from February’s figure. This is despite an 11.9% increase from June.

Despite a fall of 3.1% in July for food stores, volume sales were still 2.4% higher than February 2020. The ONS said the monthly fall in food store sales could be explained by the re-opening of restaurants and bars from 4 July.

The ONS also noted that online retail sales which boomed during lockdown, actually fell 7% in July when compared with June. However, even with the decline, sales are 50.4% higher than the pre-pandemic levels.

‘Land of haves and have nots’

Aled Patchett, head of retail and consumer goods at Lloyds Bank, said: “Despite improving sales, the retail sector remains a land of haves and have nots. While many non-essential retailers are returning to strength after lockdown – having been buoyed by spend in categories like homeware – others are living in the shadow of the recession as consumer confidence remains fragile.

“Retailers are acutely aware of the economic threats that potentially widespread redundancies and further lockdowns will pose for them this autumn. With physical stores also continuing to count the cost of low footfall, it’s no surprise to see many retailers already seizing the initiative and proactively accelerating change plans to strengthen areas of their business that will best meet future demand.”

‘Boosted by pent-up demand’

Rupert Thompson, chief investment officer at Kingswood, said: “UK retail sales were considerably stronger than expected in July, rising 3.6% m/m to be up 1.4% y/y on a year earlier. While this strength is encouraging, the coming months will be rather more challenging. July was the first full month during which shops selling non-essential items were open and sales will have been boosted temporarily by pent-up demand. Going forward, this won’t be the case and there will also be the drag on confidence and incomes as the government job support scheme is wound down.”